Nearly every AI company saw its stock price soar in 2024. Many saw their market caps double, triple, or even quadruple in value. But there's one AI stock in particular that crushed analyst expectations. And there's a chance investors could be in for yet another surprise in 2025.
NASDAQ: NVDA
Key Data Points
This AI stock has a knack for exceeding expectations
If you've been following the artificial intelligence (AI) revolution, you've likely heard a lot about Nvidia (NVDA 1.43%). Few companies have been able to so consistently outpace analysts' expectations. Even as a business with a multitrillion-dollar market cap and more than 50 analysts covering its stock, Nvidia still handily beat consensus earnings projections in each of the past four quarters. Its shares have risen by more than 100% over the past year, but its price-to-sales ratio has essentially trended sideways. Put simply, Nvidia has become a master at exceeding expectations.
NVDA PS Ratio data by YCharts.
Perhaps the biggest news from the company in 2024 was the unveiling of its next-generation Blackwell chips, named after mathematician David Blackwell. He made several pioneering advancements in statistics and game theory, as well as breakthroughs that have contributed to machine learning and optimization models.
The latest chips are notably faster than their predecessors, offering roughly 25 times the performance. But it is Blackwell's efficiency that is most impressive. According to Nvidia, Blackwell chips will be water cooled, offering "25x less cost and energy consumption than its predecessor." That's a huge deal when it comes to scalability. Previous chips like the H100 incorporated a passive heat sink for cooling -- a much less effective way of conducting thermal heat for escape.
Even though AI is still in its infancy, the power demands of AI applications, GPUs, and data centers have quickly become a glaring issue. The most immediate limiting factor to the AI revolution is not actually the technology itself but the supporting infrastructure, especially when it comes to energy. This issue is compounded when you consider how many big tech companies -- the biggest users and enablers of AI technologies today -- have made pledges to transition to sourcing most of their energy from renewable sources.
Nvidia is set to begin shipping Blackwell chips any day. But looking ahead to the rest of 2025, there's one other major catalyst that I'm keeping my eye on.
Nvidia continues to exceed expectations through surprising end-market demand
While AI is enjoying its moment in the sun following decades of incremental progress, another long-awaited technology could also be nearing an inflection point: self-driving cars.
One of the biggest reasons that autonomous vehicles have yet to go mainstream has to do with the immense amount of data and sensors that such vehicles need, not only to make real-time decisions but also to prove a level of safety and reliability that regulators and consumers can trust. Nvidia is heavily involved in this area, and its DRIVE Platform can already support level 5 autonomous driving with no human assistance necessary.
The autonomous driving future will ride on computational infrastructure provided by chipmakers. Nvidia has a dominant lead in AI GPUs with a market share estimated to be in the 70% to 95% range. Over the next year, the autonomous driving market is expected to generate $300 billion to $400 billion in revenue. I expect Nvidia will be at the center of enabling that market's growth.
Will our autonomous driving future arrive in 2025? Everyone from Amazon to Tesla is trying to make that a reality. If that occurs, there could be both revenue and profit potential for Nvidia that analysts still aren't yet pricing in. And that's the thing. Nvidia isn't growing because it's taking market share from competitors. It's growing because its end markets -- everything from AI to self-driving vehicles -- continue to surprise the market with its growth trajectory.
The recent surprise launch of DeepSeek -- an open-source rival to OpenAI's ChatGPT that is experiencing extremely rapid global adoption -- is yet another example of how Nvidia's end markets will likely continue to easily exceed expectations when it comes to growth. With several major growth markets taking off nearly simultaneously, all of which require specialized GPUs to operate, expect Nvidia to continue beating expectations in the quarters to come.
